Seaman v. National Collegiate Student Loan Trust 2007-2

Background

This memorandum and order addresses plaintiffs’ renewed sanctions motion in two related actions, including No. 18-CV-1781 and No. 18-CV-7692. Plaintiffs sought sanctions against Transworld Systems, Inc. (TSI) and its counsel because they did not disclose for more than six months that a TSI-affiliated witness had suffered a stroke and had resigned from TSI. The witness had been the subject of a deposition dispute. During the delay, plaintiffs continued litigating objections to an earlier order concerning the witness’s deposition.

After the witness’s medical event became known, plaintiffs agreed to take the deposition through written questions. They completed the deposition by May 19, 2021, and used the resulting testimony in support of their class-certification motion. In an earlier order, the court had found that the delayed disclosure unnecessarily multiplied the proceedings and had allowed plaintiffs to renew their request for non-monetary sanctions after obtaining the deposition testimony. A later order by the district judge upheld sanctions against TSI’s counsel under 28 U.S.C. § 1927, a statute that permits recovery of fees and expenses caused by conduct that unnecessarily multiplies proceedings. The earlier ruling also stated that the employee himself would not be subject to monetary sanctions under the circumstances described.

Monetary sanctions

The court determined that plaintiffs could recover reasonable fees and expenses caused by the delayed disclosure, including work opposing the earlier deposition objections and preparing the successful sanctions application. Plaintiffs could not recover for work they would have performed even if TSI had disclosed the medical information promptly.

The court reduced the requested hourly rates. It found reasonable rates of $450 per hour for Marvin Frank, $375 per hour for Gregory Frank, and $300 per hour for Asher Hawkins. The court also reduced some hours for duplicative supervisory work, excluded work outside the scope of the compensable sanctions, and reduced by 50 percent certain time spent preparing the renewed motion because the non-monetary requests were unsuccessful.

The resulting fee award was $36,060 for Hawkins, $5,325 for Gregory Frank, and $3,510 for Marvin Frank, totaling $44,895. The court also awarded $168 in transcript expenses.

Non-monetary sanctions

The court denied the requests for an adverse-inference instruction, preclusion, and orders establishing various facts. It explained that sanctions under Section 1927 are limited to fees and expenses. It also found that plaintiffs had not shown that the six-month disclosure delay prevented them from obtaining relevant facts or presenting them in time. The delay occurred after the witness’s stroke, and plaintiffs ultimately obtained his testimony before filing their class-certification motion. The court therefore did not need to decide how much the stroke affected the witness’s memory. The court further observed that plaintiffs said the facts they sought to establish were supported by the witness’s testimony, other discovery, and documents, so they could attempt to prove those facts without a discovery sanction making them uncontestable.

Disposition

Judge Barbara Moses awarded plaintiffs $44,895 in attorneys’ fees and $168 in costs, for a total of $45,063, against TSI and its counsel jointly and severally. The award was to be paid within 30 days of the memorandum and order. The court imposed no non-monetary sanctions.